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World Housing Market is Strong

World Housing Market is Strong
December 16th, 2013
Author: Syndicated Article

The global house price boom continues to gather strength during the year to the third quarter of 2013, based on the latest survey of house price statistics conducted by the Global Property Guide.

Using inflation-adjusted figures, the Global Property Guide‘s survey reveals that house prices rose in 27 of 40 housing markets which have so far published housing statistics. The more upbeat nominal figures, which are more familiar to the public, showed house prices rising in 31 countries, and falling in only 9 countries.

Report courtesy of the Global Property Guide.

 

Regional snapshots:

U.S. house prices continue to surge. In the United States, The S&P/Case-Shiller seasonally-adjusted national home price index surged 9.42% during the year to end-Q3 2013, its fifth quarter of year-on-year gains. Quarter-on-quarter, the national home price index rose by 2.78% in Q3 2013, from quarterly increases of 6.55% in Q2, 0.48% in Q1 and a slight drop of 0.56% in Q4 2012. All of the 20 U.S. major cities saw their house prices rise, with Las Vegas registering the biggest inflation-adjusted year-on-year increase of 25.7% in Q3 2013. Likewise, the U.S. seasonally-adjusted purchase-only house price index rose by 6.72% during the year to Q3 2013, the biggest year-on-year increase since Q2 2005. Construction activity remains buoyant, demand remains strong and the economy remains strong.

Pacific housing markets strong. In New Zealand, median house prices rose by 6.4% during the year to end-Q3 2013, up from the year-on-year rise of 5.11% in Q2 2013 and 5.2% in a year earlier. Likewise, Australia’s housing market saw its strongest performance since Q3 2010. House prices in the country’s eight major cities rose by 5.34% during the year to Q3 2013, up from annual price increases of 2.98% in Q2 2013, 0.85% in Q1 2013 and 0.4% in Q4 2012.

Asian housing markets remain upbeat. In Taiwan, house prices soared by 14.98% during the year to Q3 2013, a sharp improvement from the year-on-year increase of 5.45% in the same period last year. In the Philippines, the average price of 3-bedroom condominium units in Makati CBD surged by 11.09% during the year to Q3 2013, far higher than the 4.62% annual increase seen in the same period last year and the highest annual rise since Q4 2007. In Hong Kong, house prices rose by 8.07% during the year to Q3 2013. In Tokyo, Japan, the average price of existing condominium sales increased by 7.63% during the year to Q3 2013, the highest year-on-year price increase since Q4 2007. In Shanghai, China, the price index of second-hand residential buildings rose by 7.1% year-on-year to Q3 2013, in sharp contrast with the 2.21% year-on-year decline during the year to Q3 2012. During the year to Q2 2013, house prices also increased in Indonesia (4.54%), Thailand (3.75%), and Singapore (2.1%).

Dubai, UAE grew even stronger. In Dubai, UAE, house prices soared by 21.37% during the year to Q3 2013, after year-on-year rises of 17.99% in Q2 2013, 17.91% in Q1 2013, 21.64% in Q4 2012, 14.43% in Q3 2012 and 12.17% in Q2 2012.

Recovery continues in Europe. In Tallinn, Estonia, the average purchase price of dwellings in Tallinn surged 12.46% year-on-year in Q3 2013, in sharp contrast with the annual drop of 0.86% in the same period last year. In Germany, house prices soared by 9.61% in Q3 2013 from the previous year, up from annual growth rate of 3.5% in Q2 2013, and an annual decline of 3.32% in Q1 2013. Other strong European housing markets included Denmark, with house prices rising by 6.53% during the year to Q3 2013, Warsaw, Poland (5.13%), Turkey (4.65%), Kiev, Ukraine (3.54%), Switzerland (3.46%), Ireland (3.45%), and Sweden (3.05%). All, except Turkey, showed better performance during the year to Q3 2013. In addition, some European countries saw their house price falls decelerate sharply in Q3 2013 compared to the same period last year. These countries included Bulgaria (-0.21%), Finland (-0.24%), Portugal (-1.55%), Slovak Republic (-2.87%), Netherlands (-4.87%), Zagreb, Crotia (-6.56%), Romania (-7.15%), Greece (-8.85%), and Spain (-9.46%).

Momentum: 32 housing markets showed better performance in the third quarter of 2013, in momentum terms, than the same period last year, while only 9 housing markets showed weaker momentum.

Conclusion: The world housing markets recorded their strongest performance since the boom years of 2006/7. House prices are rising in many more countries than not, and the momentum trend is strongly upwards.

PR-INFLATION-NB-2013-1U.S. house prices continue to surge

The United States was the sixth best performer in our global house price survey, one notch higher than the previous quarter.

The S&P/Case-Shiller seasonally-adjusted national home price index surged 9.43%during the year to end-Q3 2013, its fifth quarter of year-on-year gains. Quarter-on-quarter,the national home price index rose by 2.03% in Q3 2013, from quarterly increases of 1.71% in Q2, 3.13% in Q1 and 2.25% in Q4 2012. All of the 20 U.S.major cities saw their house prices rise, with Las Vegas registering the biggest inflation-adjusted year-on-year increase of 25.7% in Q3 2013, followed by San Francisco (22.4%), Los Angeles (18.6%), San Diego (17.7%), Atlanta (15.6%) and Phoenix (14.9%). As a reminder, these figures are adjusted for inflation, as are all subsequent figures, except those for the Ukraine.

The FHFA’s house price indices registered more moderate year-on-year increases. The U.S. seasonally-adjusted purchase-only house price index rose by 6.72% during the year to Q3 2013, the biggest year-on-year increase since Q2 2005. During the latest quarter, the FHFA index rose by 1.58%, from quarterly increases of 1.75% in Q2 2013, 1.67% in Q1, and 1.56% in Q4 3012.

On the other hand, FHFA’s all transactions house price index rose by 2.89%year-on-year to Q3 2013, its third consecutive quarter of annual rises.Quarter-on-quarter, house prices increased 1.16% in Q3 2013.

Residential construction activity remains buoyant. In October 2013, the total number of new privately-owned housing units authorized in the U.S. rose by 13.9% to 1,034,000 units from the same period last year, based on figures from the U.S.Census Bureau. Over the same period, all the U.S. regions recorded an increase in the number of housing units authorized, with the Northeast registering the biggest year-on-year rise of 23.2%, followed by the West(17.8%), South (14.4%) and Midwest (2.6%).

In November 2013, U.S. home builder sentiment remained steady from the previous month, amidst unresolved debt and federal budget issues that the country is facing, according to the National Association of Home Builders.

Demand continues to surge. The total number of new houses sold in the country soared by 21.6% in Q3 2013 from the same period last year, to 444,000 units, according to the U.S. Census Bureau.

In November 2013, the average interest rate for 1-year adjustable rate mortgages (ARMs) was 2.61%, down from 2.63% in the previous month, but up from 2.57% in the same period last year, based on figures released by Freddie Mac. Likewise,the average rate for 5-year ARMs fell to 2.97% in November 2013 from 3.02% inthe previous month but up from 2.73% in a year earlier. On the other hand, the average interest rate for 15-year fixed rate mortgages (FRMs) was up to 3.3%from 2.66% in the previous year while the average rate for 30-year FRMs rose to 4.26% from 3.35% in a year earlier.

The U.S. economy expanded more than expected in Q3 2013, with an annualized real GDP growth rate of 3.6%, up from 2.5% in Q2, and 1.1% in Q1 2013, thanks to increases in private inventory investment, personal consumption, exports, residential and non-residential fixed investment and government spending, according to the U.S. Bureau of Economic Analysis. The Fed has kept the fed funds rate near zero since 2008 in an effort to boost the world’s largest economy.

Canada’s housing market continues to subside

House prices in Canada‘s eleven major cities rose by just 1.61% during the year to end-Q3 2013, from year-on-year price rises of 0.65% in Q2 2013, 1.62% in Q1 2013, and 2.19% in Q4 2012, thanks to the government’s continuous implementation of several rounds of housing market cooling measures. House prices increased by 1.06% in Q3 2013 from the previous quarter.

However,the national figures conceal variations in local house price movements. In inflation-adjusted terms, Hamilton registered the highest year-on-year increase of 4.8%, followed by Calgary (4.5%), Toronto (2.6%) and Quebec (2.2%). Minimal house price rises were seen in Edmonton (1.7%), Winnipeg (1%) and Vancouver(0.6%). In Ottawa, house prices remained unchanged over the period. In contrast, Halifax had seen the biggest annual house price fall of 2.8% in Q3 2013, followed by Victoria (-1.6%) and Montreal (-0.2%).

House prices in Canada surged by 49% from Q1 2000 to Q1 2009, mainly due to low interest rates and continuous economic growth. From Q2 2009 to Q4 2012, house prices increased by another 17%, despite efforts by the government to cool the housing market.

In mid-2013,the country’s federal housing agency, the Canada Mortgage and Housing Corporation (CMHC) tightened mortgage lending again by limiting guarantees it offers to banks and other lending companies, in an attempt to strengthen its bid to slowdown the housing market.

Canada’s nationwide house prices are expected to increase by 3.6%year-on-year during 2013 and by another 1.7% in 2014, according to the Canadian Real Estate Association (CREA). In 2013, house prices are expected to rise by 4.8% in Alberta, 3.1% in Ontario, 2.7% in British Columbia and 0.9% in Quebec. On the other hand, sales activity in Canada is also projected to fall by 1% to 449,900 in 2013 from a year earlier, according to CREA.

In the third quarter of 2013, the economy registered more-than-expected annualized real GDP growth rate of 2.7%, up from 1.6% in the previous quarter, according to StatisticsCanada. The country’seconomic growth is expected at 1.6% in 2013, 2.3% in 2014 and 2.6% in 2015,according to the Bank of Canada (BoC).The BoC kept its key interest rate steady at 1% in October 2013, in place since September 2010.

Pacific housing markets grow stronger

In New Zealand, the median house prices rose by 6.4% during the year to end-Q3 2013, up from the year-on-year rise of 5.11% in Q2 2013 and 5.2% in a year earlier. In Q3 2013, house prices increased 0.32% from the previous quarter

Demand continues to rise, albeit at a slower pace, amidst the central bank’s new restrictions on high LVR lending. In October 2013, the total number of dwellings sold in New Zealand increased by 2.1% year-on-year to 6,778 units, based on figures released by the Real Estate Institute of New Zealand (REINZ). Median-days-to-sale dropped to 31 days in October 2013, from 30 in the same period last year.

New Zealand’s economy is expected to expand by 2.5% in 2013, from 2.7% in 2012, 1.4% in 2011 and 1.9% in 2010, according to the IMF. Moreover,the economy is expected to grow next year at its strongest rate since 2007,with a projected real GDP growth rate of 3.3%, mainly led by a surge in household spending, according to the Organisation for Economic Cooperation and Development (OECD). In November 2013, the Reserve Bank of New Zealand (RBNZ) kept its official cash rate(OCR) at a record low of 2.5%, in place since March 2011. However, the RBNZ has warned that the rate could start to rise next year.

Australia‘s housing market had seen its strongest performance since Q3 2010. House prices in the country’s eight major cities rose by 5.34% during the year to Q3 2013, up from annual price increases of 2.98% in Q2 2013, 0.85% in Q1 2013 and 0.4% in Q4 2012. House prices increased 0.72% quarter-on-quarter in Q3 2013, the fourth consecutive quarter of quarterly gains.

Residential construction activity remains healthy. The total number of dwelling units approved (seasonally-adjusted) soared by 23.1% to 16,491 units in October 2013 from a year earlier, according to the Australian Bureau of Statistics (ABS).

In September 2013, the total number of housing loans rose by 12.8%to 51,480 from the same period last year, according to ABS.

In the third quarter of 2013, the Australian economy expanded by an annualized rate of 2.3%, after growing by 2.6% and 2.5% in the previous two quarters,as domestic demand moderates, according to the ABS. The economy is expected to grow by 2.5% in 2013, after registering real GDP growth rates of 3.7% in 2012,2.4% in 2011, 2.6% in 2010 and 1.4% in 2009, according to the IMF. In November 2013, the Reserve Bank of Australia (RBA)kept its cash rate to a record low of 2.5%, after cutting it by 25 basis points in August 2013 to match NZ’s OCR for the first time in more than four years.

PR-NOMINAL-NB-2013-1Asian housing markets remain upbeat

Eight of the nine Asian markets for which figures are available saw their house prices rise during the year to Q3 2013. In momentum terms, seven of the nine housing markets showed better performance in the third quarter of 2013 compared to the same period last year.

Taiwan retains its spot as the star performer in Asia and the second best performer in our global survey.House prices soared by 14.98% during the year to Q3 2013, a sharp improvement from the year-on-year increase of 5.45% in the same period last year. However in a quarterly basis, house prices increased by a meagre 0.09% during the latest quarter.

In September 2013, property developers have unveiled TWD179.4 billion (US$6.06billion) worth of residential housing developments in northern Taiwan, the second largest development in five years, according to My Housing magazine.

Construction activity is soaring. Housing permits, an indicator of the condition of the residential construction sector, more than doubled to 15,217 units in October 2013 from a year earlier, based on figures released by the Ministry of Interior.

In the third quarter of 2013, Taiwan’s real GDP growth rate was recorded at 1.58% from a year earlier. The Taiwanese economy is projected to grow by 2.18% this year,after real GDP growth rates of 1.3% in 2012, 4.1% in 2011 and 10.8%in 2010, according to the Australia and New Zealand Banking Group Ltd. (ANZ).Economic growth is expected at 3.9%, based on projections by Standard Chartered Bank.

The Philippines is the fourth best performer in our global house price survey, with the average price of 3-bedroom condominium units in Makati CBD surging by 11.09% during the year to Q3 2013,far higher than the 4.62% annual increase seen in the same period last year and the highest annual rise since Q4 2007. Quarter-on-quarter, house prices rose by 1.63% in Q3 2013.

The rebuilding and reconstruction of Tacloban City, located in Eastern Visayas,after it was devastated by Supertyphoon Haiyan last November 2013 is expected to bolster the housing market further and the country’s economic growth in 2014.

In the third quarter of 2013, the Philippine economy grew by 7%, after registering annual growth rates of 7.5% in Q2 2013 and 6.3% in Q1 2013, according to the National Statistical Coordination Board (NSCB).

Both of Taiwan and the Philippines showed better performance in Q3 2013 from a year earlier.

Hong Kong‘s housing market remains strong, though house price increases decelerated sharply. During the year to Q3 2013, house prices rose by 7.76%,down from year-on-year price increases of 13.89% in Q2 2013, 20.44% in Q1 2013,and 21.11% in Q4 2012. House prices rose by 2.24% quarter-on-quarter during the latest quarter.

Hong Kong’s economy expanded by 2.9% in Q3 2013 from a year earlier, following annualized GDP growth rates of 3.2% in Q2 2013 and 2.9% in Q1 2013. Economic growth is expected at 3% in 2013, from real GDP growth rates of 1.5% in 2012,4.9% in 2011 and 6.8% in 2010.

After registering house price falls or a meagre increase during the year to Q3 2012,several Asian housing markets are back with vengeance. In Tokyo, Japan, the average price of existing condominium sales increased by 7.63% during the year to Q3 2013, the highest year-on-year price increase since Q4 2007 and in contrast with the annual decline of 2.62% in Q3 2012. House prices increased 1.64% quarter-on-quarter during the latest quarter.

The Japanese economy grew by an annualized rate of 1.9% in Q3 2013 from growth rates of 2.6% in Q2 2013 and 3.8% in Q1 2013. The country’s healthy economic growth is mainly due to the economic policies of Prime Minister Shinzo Abe, who came to power in December 2012. These economic policies, which are now affectionately referred to as “Abenomics”, include increasing public infrastructure spending, devaluation of the yen andaggressive quantitative easing by the Bank of Japan (BOJ). The economy is expected to expand by about 2% in 2013, from a growth of 2% in 2012 and a decline of 0.6% in 2011, according to the IMF.

China‘s housing market has also showed remarkable performance during the year to Q3 2013. In Shanghai, China,the price index of second-hand residential buildings rose by 7.1% year-on-year to Q3 2013, in sharp contrast with the 2.21% year-on-year decline during the year to Q3 2012. On a quarterly basis, house prices in Shanghai increased 1.46%during the latest quarter.

China’s economy expanded by 7.8% in Q3 2013 from a year earlier, up from an annual GDPgrowth rates of 7.5% in Q2 and 7.7% in Q1 2013, fuelled by increases in investment and government stimulus packages. The Chinese economy is expected to grow by 7.6% in 2013 and by another 7.3% in 2014.

The performance of the other Asian housing markets is also noteworthy. These included Indonesia, where house prices rose by 4.54% during the year to Q2 2013; Thailand (3.75%), and Singapore (2.1%).

Of all the nine Asian countries included in our global survey, only India had seen house price falls during the year to Q3 2013. In Delhi, India, house prices dropped by 3.58% in Q3 2013 from the previous year, the first annual price decline seen since Q2 2010. From spectacular average annual real GDP growth rates of 8.5% in 2009 and 10.5% in 2010,economic growth slowed sharply to 6.3% in 2011 and 3.2% in 2012. In 2013, the economy is projected to grow by a modest 3.8% from a year earlier.

Recovery continues in Europe

Of the twenty-four European housing markets included in our global housing market survey, nineteen performed better in Q3 2013 than the previous year while only five showed poorer performance. Moreover, more European housing markets had seen house price rises than price falls during the year to Q3 2013.

Estonia, Europe’s best performer during the year to Q3 2013, showed its strongest performance in six years. The average purchase price of dwellings in Tallinn surged 12.46% year-on-year in Q3 2013, in sharp contrast with the annual drop of 0.86% in the same period last year. House prices increased by 3.78% in Q3 2013 from the previous quarter.

In the third quarter of 2013, the Estonian economy grew by 0.4% from a year earlier, down from the 1.1% annual growth in Q2 2013. Economic growth is expected at 2% in 2013 and another 4.2% in 2014, according to the country’s central bank.

Germany also showed strong performance during the year to Q3 2013, which landed on the fifth place in our global house price survey. Nationwide house prices soared by 9.61% in Q3 2013 from the previous year, up from annual growth rate of 3.5% in Q2 2013, and an annual decline of 3.32% in Q1 2013. In a quarterly basis, house prices rose by 4.44% in Q3 2013.

Germany’s economy is expected to grow by just 0.5% in 2013, after registering real GDP growth rates of 0.9% in 2012, 3.4% in 2011 and 3.9% in 2010, according to the IMF.

Other strong European housing markets included Denmark,with house prices rising by 6.53% during the year to Q3 2013, Warsaw, Poland (5.13%), Turkey (4.65%), Kiev, Ukraine (3.54%), Switzerland (3.46%), Ireland (3.45%), and Sweden (3.05%). All, except Turkey,showed better performance during the year to Q3 2013. In a quarterly basis,house prices increased by 0.62% in Denmark, 4.21% in Poland, 3.61% in Turkey,0.79% in Switzerland, 4.06% in Ireland, and 1.65% in Sweden. Only Kiev, Ukraine recorded a quarterly price drop of 2.13% during the latest quarter.

Some European housing markets also saw minimal house price rises. This group included Riga, Latvia, with house prices rising by 2.44% year-on-year in Q3 2013, Iceland (2.03%), UK (1.54%), and Vilnius, Lithuania (0.8%). Quarter-on-quarter, house prices rose by 1.72% in Riga, Latvia, 1.43%in Iceland, 1.8% in the UK and 0.42% in Vilnius, Lithuania.

Despite this significant improvement, the six weakest housing markets in our global survey were all in Europe.

Spain is now the world’s weakest housing market during the year to Q3 2013, with house prices plunging by 9.46%, from annual house price falls of 12.4% in Q2 2013, 12.82% in Q1 2013, 13.82% in Q4 2012 and 14.54% in Q3 2012. However,this is already an improvement from the double-digit annual price falls seen from Q3 2011 to Q2 2013. In a quarterly basis, house prices fell by 1.65% in Q3 2013.

In the third quarter of 2013, the Spanish economy finally emerged from a two-year recession with real GDP expanding by 0.1% from the previous quarter, an improvement from the 1.2% decline seen in the previous year, according to the Bank of Spain. The economy is expected to contract by 1.3% in 2013, from an annual contraction of 1.6% in 2012 and a meagre growth of 0.05% in 2011.

Greece comes second on the list of the world’s worst performers. House prices dropped 8.85% during the year to Q3 2013, an improvement from the 13.58% year-on-year drop seen in Q3 2012. Greek house prices actually increased 0.81% quarter-on-quarter in Q2 2013.

In the third quarter of 2013, the Greek economy shrank by 3% from the same period last year, from an annual decline of 3.7% in the previous quarter. The economy is expected to contract by 4.2% in 2013, its sixth year of recession. In 2014, the Greek economy is finally projected to grow by about 0.6%, according to the IMF.

After 10 years of house price falls, Russia‘s housing market remains miserable. The house price index in the secondary market dropped 8.18% during the year to Q3 2013, after year-on-year declines of 8.31% in Q2 2013, 8.07% in Q1 2013, 5.71% in Q4 2012 and 3.94% in Q3 2012. In a quarterly basis, house prices dropped 2.03% in Q3 2013.

Other European housing markets which were still struggling included Romania with house prices falling by 7.15% during the year to Q3 2013, Zagreb, Croatia (-6.56%), Netherlands (-4.87%), and Slovak Republic (-2.87%). The good newsis that all of these four European countries saw their house price falls decelerate sharply during the year to Q3 2013.

Some European housing markets saw very minimal house price falls. These included Portugal, with house prices dropping by 1.55% year-on-year to Q3 2013, Finland (-0.24%), Bulgaria (-0.21%) and Norway (-0.11%). In a quarterly basis,house prices increased by 0.47% in Portugal and 0.93% in Bulgaria and fell by 0.08% in Finland and 2.04% in Norway.

Middle East shows spectacular house price rises

Dubai, UAE remains the best performer in our global house price survey for the third consecutive quarter. House prices soared by 21.37% during the year to Q3 2013, after year-on-year rises of 17.99% in Q2 2013, 17.91% in Q1 2013,21.64% in Q4 2012, 14.43% in Q3 2012 and 12.17% in Q2 2012.

Luxury residential towers in Dubai are selling like pancakes. For an instance, Skai Properties, a new luxury apartment complex located on the Palm Jumeirah has just sold 98% of its 702 units in September 2013.<

From Q3 2008 to Q3 2011, Dubai saw one of the world’s worst housing crashes with house prices plunging by 53%, mainly due to the adverse impact of the global financial and economic meltdown. Then in Q2 2012, Dubai’s housing market started to recover, thanks to the emirate’s robust economic growth, bolstered by several other factors, including the availability of finance, the city’s status as a safe haven, an exchange rate pegged to the U.S. dollar, and improved consumer and investor confidence. Dubai’s economy is projected to expand by 4.7% in 2013 and by another 4.5% in 2014, thanks to strong wholesale and retail, transportation, manufacturing and real estate sectors, according tothe emirate’s Department of Economic Development (DED). On the other hand, the whole economy of the UAE is projected to grow by 4.4% in 2013 and by another 4.5% in 2014, according to Standard Chartered Bank.

Likewise, Israel‘s housing market remains robust,with the average price of owner-occupied dwellings rising by 5.62% during the year to Q3 2013, after year-on-year increases of 6.27% in Q2 2013, 8.21% in Q1, 4.12% in Q4 2012 and 3.12% in Q3 2012. House prices rose by 1.34% during the latest quarter.

Demand increased slightly. In October 2013, the total number of dwellings sold rose by 1.73% year-on-year to1, 819 units, according to the Central Bureau of Statistics (CBS).

The construction sector is also picking up. In Q3 2013, the total number of dwellings started surged by 17.11%year-on-year to 10,176 units, based on figures released by the CBS. Likewise,the number of dwellings completed also rose by 11.88% to 9,925 units over the same period. In October 2013, the number of dwellings for sale in the country also increased by 1.98% from the same period last year, 21,838 units.

Israel’s economic growth is expected at 3.8% in 2013, after registering real GDP growth rates of 3.4% in 2012, 4.6% in 2011, and 5.7% in 2010, according to the IMF.

Brazil’s housing market continues to slow

After four years of double-digit house price rises, Brazil‘s housing market continues to slow, amidst a slowing economy. In Sao Paulo,Brazil, house prices rose by 6.98% during the year to Q3 2013, far lower than the 11.98% year-on-year increase seen in the same period last year. House prices in Sao Paulo were up 3.03% during the latest quarter.

Despite economist Robert Shiller’s warning that Brazil could be facing a dangerous housing bubble, with house prices in Sao Paulo up 181%, and those in Rio De Janeiro up 225% since 2008, President Dilma Rousseff disregarded the warnings and instead implemented programs to boost demand further. On September 30, the government increased the price limit of houses that homebuyers can purchaseusing the unemployment insurance fund.

Starting early this year, President Dilma Rousseff has been recently pouring money in to the housing market, using federal subsidies and state bank loans, by nearly doubled spending on the country’s plan to build two million affordable homes by 2014. Moreover, Rousseff also extended tax cuts to buoy demand, boosted subsidized credit to businesses and unveiled a US$240 billion infrastructure project to attract investments.

In an effort to curb inflationary pressures, the central bank raised the Selic rate by 50 basis points to 10% in November 2013.

The Brazilian economy grew by an annualized 2.2% in Q3 2013 from 3.3% in Q2 2013,2.2% in Q1 2013 and 2.6% in Q4 2012. However, on a quarterly basis, the economy actually contracted by 0.5% in Q3 2013, amid falling confidence and investment.The Brazilian economy is expected to grow by 2.5% in 2013, after registering real GDP growth rates of 0.9% in 2012, 2.7% in 2011 and 7.5% in 2010, according to the IMF.

“It will take a while until we see Brazil at the pre-financial-crisis growth level. Disappointing growth is the new Brazilian normal,” said Bill Adams of PNC Financial Services Group.

South Africa’s housing market falling

In South Africa, the price index for medium-sized apartments fell by 2.01% year-on-year to Q3 2013,down from annual growth rates of 0.84% in Q2 2013, 3% in Q1 2013 and 3.26% in Q4 2012. House prices dropped 1.33% quarter-on-quarter during the latest quarter.

House prices in South Africa declined by 15.5% during the global financial crisis from Q4 2007 to Q2 2009. After a short-lived recovery in 2010, house prices dropped again by 7% from Q1 2011 to Q2 2012. From Q4 2012 to Q2 2013, houses prices increased by 2.2%.

Construction activity is up. The total value of residential building plans approved increased by 12.6% year-on-year in September 2013,based on figures from Statistics South Africa (Stats SA).

In the third quarter of 2013, the South African economy expanded by an annualized 0.7%, down from 3.2% annual growth in the previous quarter, the slowest pace in more than four years, according to Stats SA. The SARB has recently cut its economic growth forecast for 2013 to 1.9% in the initial forecast of 2%.

The central bank has recently kept its benchmark interest rate on hold at 5%, in place since July 2012 and the lowest level in more than three decades to buoy consumer spending.

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